[Introduction] Recently, the domestic vinyl acetate market has exhibited a weak pattern characterized by "ample supply, sluggish domestic demand, and insufficient cost support." Selling pressure on suppliers has continued to intensify, leading to a significant price decline. With bearish sentiment dominating the market, a notable improvement in this weakness is unlikely in the short term.

1. Highlighted Supply-Side Pressure

Entering May, the operating rates of the domestic vinyl acetate industry have remained relatively high overall, with some calcium carbide-based units operating at full capacity, resulting in a sustained concentrated release of supply. Combined with restricted logistics and transportation during the May Day holiday, corporate inventories have seen significant accumulation. After the holiday, as logistics recovered, companies showed a strong willingness to ship their products, further intensifying supply pressure in the spot market and leading to ample spot supply. Vinyl acetate prices have continued to decline. While cost pressures vary across different production processes, major producers have maintained stable operations. Due to the substantial inventory backlog from the earlier period, the pace of destocking is slow, and supply-side pressures have not yet been effectively alleviated. Suppliers continue to face significant sales pressure.

2. Weakening Cost Support & Squeezed Corporate Profits

The support from the cost side for vinyl acetate has been continuously weakening, with prices of core raw materials declining simultaneously, further exacerbating price pressure in the market. Prices of upstream raw materials, including glacial acetic acid, ethylene, and calcium carbide, have all exhibited a fluctuating downward trend. This has led to a persistent decrease in the production cost curve for vinyl acetate, rendering cost support for market prices completely ineffective.

From a profitability perspective, significant differentiation exists among companies using different processes. Calcium carbide-based producers, benefiting from relatively lower production costs, have managed to maintain a certain level of profitability. However, their profit margins have been significantly compressed compared to earlier periods. Conversely, ethylene-based producers, affected by the lagged decline of high raw material prices and their inherently higher production costs, have seen their product profit margins continuously squeezed. Prices for some low-end transactions have already approached marginal profit levels. Additionally, some companies facing cash flow pressure have actively adopted low-price sales strategies, further dragging down mainstream market quotations.

3. Sluggish Demand & Quiet Trading Atmosphere

Consistently muted downstream demand has become the core factor constraining vinyl acetate market prices. Simultaneously, the weakness in domestic demand support is unlikely to improve significantly in the short term. Demand from key downstream sectors is generally sluggish, with few new orders being placed. User purchasing appetite is low, leading to an overall pattern of "procurement on a need-to basis, with few large orders." The EVA sector has been particularly weak, with multiple main units undergoing scheduled maintenance, dragging operating rates down to the 60%-70% range. Demand from core areas like photovoltaic (PV) materials is tepid, resulting in a sharp reduction in vinyl acetate procurement volumes. While the PVA sector maintains stable operations, terminal order follow-through is insufficient. Moreover, many PVA producers operate integrated units, providing only weak support for vinyl acetate. Looking at traditional demand sectors, terminal fields such as construction, textiles, and adhesives have experienced a peak season without the expected boom. Order follow-through is lackluster, factory operating rates have declined, further reducing demand for vinyl acetate. Furthermore, the export market performance for vinyl acetate is unsatisfactory. Increased competition for supply within the Asian region has led to continuously declining overseas offer prices. Export volumes have fallen month-on-month, failing to compensate for the gap in the domestic market.

4. Significant Price Decline & Bearish Sentiment Prevails

Influenced by multiple factors including ample supply, weak demand, and collapsing cost support, vinyl acetate prices have been under sustained pressure recently, showing a significant downward trend. As of May 15th, the mainstream vinyl acetate quotation in the East China region was 7900-8200 RMB/tonne, with a weekly average price of 8050 RMB/tonne, down 575 RMB/tonne or 6.67% from the previous week. Prices for calcium carbide-based product ranged from 6500-7900 RMB/tonne. The higher end of this range primarily represents quotations from petrochemical enterprises, while market negotiations centered around the lower end. Some further room for negotiation exists below these low-end prices. Low-priced supplies frequently emerged, contributing to a significant price drop.

Market sentiment is heavily dominated by a bearish atmosphere. Holders, pressured by inventory and sales needs, are strongly inclined to lower prices to move goods. Downstream enterprises, adhering to a mindset of "buying on rising prices, not on falling ones," are adopting a wait-and-see approach, anticipating even lower prices. This has resulted in very few actual transactions in the market and has further intensified the supply-demand contradiction. Currently, the market lacks clear positive signals or guidance, with all participants in a state of watchful waiting, closely monitoring the destocking pace and potential price adjustment signals from major producers.

Summary & Outlook

Looking ahead, some downstream EVA units are scheduled to restart, and several EVA producers plan to switch production back towards EVA later. This could gradually increase operating rates in that sector, leading to some increase in large-volume demand. No positive improvement is anticipated from traditional demand sectors. Enthusiasm for operation among downstream plants remains low, making the probability of concentrated restocking low. On the cost side, operating rates in the upstream ethylene industry are gradually recovering, while glacial acetic acid prices face difficulty rebounding due to inventory pressure. On the supply side, some units that underwent scheduled maintenance are expected to restart around the end of the month. Additionally, the potential startup of Guangxi Huayi's new 300,000 tonne/year capacity adds to market bearish sentiment. In the short term, the weak pattern of "ample supply, sluggish domestic demand, and insufficient cost support" in the vinyl acetate market is unlikely to change, and the price center is expected to continue its downward trend. It is forecasted that in mid-to-late May, the mainstream vinyl acetate quotation in the East China region may further decline to 7200-7500 RMB/tonne, and low-end calcium carbide-based product prices could drop to 6000-6500 RMB/tonne. The market is expected to maintain a weak performance.